Ch. 13 - Multiple Choice

Firms develop innovations in all the following ways EXCEPT

a. through autonomous or induced strategic behavior.

b. by acquiring other companies.

c. through cooperative strategies.

d. via divestiture of low-performing units.
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Pet Care Companion Connection (PCCC) is an organization that trains persons with mild-to-moderate mental disabilities to care for pets in a pet boarding facility. This organization has been successful in providing a quality service for pet owners and a supportive training environment for their trainees. The tuition charged to trainees is only somewhat higher than the fee, which day-care providers would charge for these individuals. Graduates of the program are qualified for employment by commercial kennels. PCCC is an example of

a. taking advantage of a need in the marketplace.

b. creative destruction of existing services for pet boarding.

c. institutionalized entrepreneurship.

d. internal corporate venturing.
Isidore Security Services is a national provider of guard and security services for businesses. It has been in business for over 90 years, having been founded by one of Teddy Roosevelt's Rough Riders (Isidore O'Malley). Lately it has been losing clients to more aggressive and innovative firms offering remote security monitoring systems instead of a guard-based approach. The board of directors of Isidore Security Services is concerned that this downward trend may threaten the existence of this venerable firm and the jobs of its employees.

a. This is an example of an established firm neglecting the opportunity-seeking aspect of strategic entrepreneurship.

b. This example shows the dysfunctional aspects of unrestricted entrepreneurialism.

c. This is an example of the lack of human capital hampering internal innovation.

d. Isidore Security Services is suffering from the "novelty effect" wherein new firms are more attractive to clients/customers merely because they are new and not because they add value.
GreenBox, a company that recycles paper products to make cardboard cartons, has introduced a new product that resists damage by moisture. GreenBox can expect that

a. this innovation will resist competitors' attempts to imitate it.

b. its investors will react positively to the introduction of the new product because of the potential for higher returns.

c. its investors will react negatively because of the risk and cost entailed in introducing a new product.

d. this will be recognized in the industry as a radical innovation.
The number of patents held by an organization is a rough guide to the a. effective use of organizational politics. b. future success of an initial public offering. c. amount of venture capital a firm will be able to attract. d. level of innovation in a firm.level of innovation in a firm.3M's Cubitron II, described as "an industrial abrasive that cuts faster, lasts longer, sharpens itself, and requires less elbow grease than any other abrasive on the market" is an example of a. imitation of a competitor's product. b. a radical innovation. c. an incremental innovation. d. a(n) innovation created through a cooperative incremental innovation._____ are individuals, acting independently or as part of an organization, who see an opportunity and then take risks to develop an innovation to exploit it. a. Leaders b. Innovators c. Entrepreneurs d. Transformative leadersEntrepreneursEntrepreneurs tend to have all the following characteristics EXCEPT a. willing to take responsibility for projects. b. passion. c. preference for certainly about projects. d. optimism.preference for certainly about projects.Roland has developed and patented an inexpensive and organic way to enhance the fertility of clay soils without the addition of chemical fertilizers. But established agricultural chemical companies have rejected his proposals. After 6 months of promoting his invention during his time off from his regular job, Roland has decided to set his dream aside. Roland lacks a key characteristic of successful entrepreneurs, which is a. the ability to identify opportunities. b. a corporate sponsor. c. financial slack. d. passion for his invention.passion for his invention.If the firm's current employees are well-trained in their jobs, but also have other knowledge, skills, and abilities, these employees have a. social capital. b. entrepreneurial capabilities. c. high absorptive capacity to learn. d. intellectual slack.high absorptive capacity to learn.Knowledge must be transferred to others in the firm to enhance the entrepreneurial competence of the firm. This requires that a. the receiving party have adequate absorptive capacity to learn. b. the communication process be highly intensive. c. the knowledge be broken into the smallest comprehensible units. d. training consultants be involved in every step of transference.the receiving party have adequate absorptive capacity to learn.The risks of international entrepreneurship include all the following EXCEPT a. unstable foreign currencies. b. problems with market efficiencies. c. limitations on market size. d. strong "buy-domestic" programs.strong "buy-domestic" programs.Research shows that internationally diversified firms tend to be _____ than domestic-only firms. a. less profitable b. more innovative c. less technologically advanced d. more likely to have an individualistic culturemore innovativeThe level of entrepreneurial activity in a nation is ______ the nation's level of economic development. a. negatively related to b. independent of c. positively related to d. weakly related topositively related to_____ is one of the reasons for the differences in rates of entrepreneurship among different countries. a. Climate b. Competitiveness c. Culture d. ConstitutionCultureResearch suggests that _____ is needed to encourage entrepreneurial behavior. a. individualism rather than collectivism b. a balance between individualism and cooperative behavior c. collectivism rather than individualism d. limited autonomy and incentivesa balance between individualism and cooperative behaviorAgroPharm is searching for a top-level executive. AgroPharm has marketed its products only to U.S. farmers and agribusinesses in the past. Now, the company plans to expand operations to Mexico and Central America in the next 2 years. To maximize the chances of success it is critical that the new executive a. be of Hispanic descent. b. have international experience. c. possess an advanced degree in animal science. d. have a background in managing agribusiness firms.have international experience.Which of the following is true? For firms to be entrepreneurial, they require a culture with a. an emphasis on individualism in Western nations and an emphasis on collectivism in Eastern nations. b. an exceptionally high level of collectivism. c. a balance of individualism and collectivism. d. an exceptionally high level of individualism.a balance of individualism and collectivism.Successfully creating innovations through internal means requires a. a highly individualistic culture. b. significant spending on R&D. c. acquisitions of innovative firms. d. venture capital.significant spending on R&D.Panera Bread has innovated to improve the quality of its distribution system, to improve the quality of its bread dough, and to introduce new menu items. These are examples of a. incremental innovation. b. invention. c. imitation. d. the use of social capital.incremental innovation.Panera Bread develops and produces its own dough-based products, but it works with manufacturing partners to create new soups. Panera Bread is therefore a. increasing its costs and reducing its potential to succeed. b. engaged in internal corporate venturing. c. pursuing innovation through both internal and cooperative strategies. d. not an innovative company.pursuing innovation through both internal and cooperative strategies.QuadroVax is investing heavily in research and development on new methods of vaccine development that would speed up the creation of vaccines for newly emerging viruses and to get these vaccines to the market rapidly. QuadroVax's shareholders can expect a. immediate wealth creation. b. a long wait for an uncertain payoff. c. a long wait for a high probability payoff. d. a large payoff in the short term with rapidly decreasing wealth generation in the longer run.a long wait for an uncertain payoff.A successful _____ innovation will be less risky but less profitable than a successful _____ innovation. a. incremental; radical b. radical; incremental c. alliance-generated; acquisition-generated d. acquisition-generated; alliance-generatedincremental; radicalInnovations that involve significant technological breakthroughs and create new knowledge a. build incrementally on the firm's existing technologies and knowledge. b. are the most common type of innovation. c. involve substantial uncertainty and risk. d. typically have clear market opportunities.involve substantial uncertainty and risk._____ involves internally developed incremental and radical innovations that result from deliberate efforts. a. Internal corporate venturing b. Autonomous strategic behaviors c. Bottom-up strategic behaviors d. Product championingInternal corporate venturingInternal corporate venturing does NOT involve a. autonomous strategic behavior. b. induced strategic behavior. c. strategic alliances. d. product champions.strategic alliances.WayWard Products has a deliberate strategy to encourage internal innovations. It has established processes to support autonomous strategic behavior as well as induced strategic behavior. WayWard Products is involved in a. entrepreneurial incubation. b. creative destruction. c. internal corporate venturing. d. cooperative innovation strategies.internal corporate venturing.One of the distinguishing differences between the two sources of internal corporate venturing (autonomous strategic behavior and induced strategic behavior) is whether the innovation process a. is encouraged through a bottom-up or top-down process. b. is encouraged by a product champion or an entrepreneur external to the organization. c. relies on internal structure or existing strategy to encourage innovation. d. is in a large or small encouraged through a bottom-up or top-down process.Autonomous strategic behavior is a(n) _____ process in which product champions pursue new ideas. a. top-down b. horizontal c. integrated d. bottom-upbottom-upThe idea that it is "vital to sell the ideas to others in the organization so that innovations will be commercialized" is the rationale behind the use of a. product champions. b. joint ventures. c. strategic leadership. d. cross-functional teams.product champions.A negative effect of acquiring other firms for the purpose of innovation is a. innovations cannot be transferred between organizations. b. the effect it can have on the firm's own ability to produce innovations. c. innovations may not actually be present in the firm after the purchase is completed. d. the acquired firm's employees usually leave.the effect it can have on the firm's own ability to produce innovations.Charles is a customer service representative for a home improvement store. He has creative ideas about how to increase customer satisfaction. Charles's talents will be most likely to be used in a firm that a. uses the induced strategic behavior form of internal corporate venturing. b. uses the autonomous strategic behavior form of internal corporate venturing. c. makes significant investment in research and development. d. focuses on an acquisition strategy for gaining innovative ideas.uses the autonomous strategic behavior form of internal corporate venturing.The new abrasive, Cubitron II, was developed through cooperative relationships among 3M business units. As such, Cubitron II is an example of a. the use of autonomous strategic behavior. b. the use of induced strategic behavior. c. development of radical innovations. d. innovation through acquisitions.the use of induced strategic behavior.To be successful, an autonomous process for developing new products relies on a. the diffusion of tacit knowledge. b. the acquisition of innovative firms. c. strategic alliances with other firms. d. internal corporate venturing.the diffusion of tacit knowledge.Induced strategic behavior is a process that fosters product innovations that a. are likely to change a firm's strategic intent and mission. b. will lead to greater financial returns. c. are aligned closely with current strategy and structure. d. will come to market in a short period of time.are aligned closely with current strategy and structure.Induced strategic behavior as a form of internal innovation is a(n) _____ process. a. bottom-up b. top-down c. free-flowing d. externaltop-downThrough the work of cross-functional teams, product development stages are grouped into _____ processes. a. short-term and long-term b. parallel or overlapping c. serially ordered d. complementaryparallel or overlappingA major barrier to the use of cross-functional teams is a. excessive individualism of creative people. b. lack of communication skills of technical people. c. independent frames of reference of team members. d. lack of social capital by team members.independent frames of reference of team members.A cross-functional product development team has been examining a proposed new product intensively for 6 months. The team has decided that although the product is unique and technologically advanced, the cost of production will exceed the price that the consumer would be willing to pay. At this point, the product development team should a. engage in creative destruction. b. recommend that the product be sold at a loss in order to create a new market. c. turn over the product evaluation to a new product-development team which may have more passion for the product. d. recommend that the project be set aside.recommend that the project be set aside.When used effectively, cross-functional teams will often bring about a. faster product development processes. b. an increased need for additional information. c. conflicting information about the business environment. d. future cooperative alliances.faster product development processes.Which of the following is one of the barriers to effectiveness when using cross-functional teams to integrate organizational functions? a. dissension within the top management team b. informal organizational processes within the firm c. the firm's strategic orientation d. organizational politicsorganizational politicsCross-functional teams are useful in developing and commercializing new products because each team member brings his or her special competencies to the project. Each team member brings his/her point of view from his/his _____ may cause barriers to effective communication a. independent frames of reference b. entrepreneurial mind-sets c. professional rivalries d. politicized points of viewindependent frames of referenceA cross-functional work team is having difficulties in operating smoothly and friction has developed among some of the members. Many of the strongest complaints are from the representatives of management who complain that the research scientists are disorganized, haphazard, and undisciplined. Managers complain the scientists do not adhere to any fixed rules or procedures. On the other hand, the research scientists complain that the managerial representatives are excessively rule-oriented bureaucrats, and have no flexibility or spontaneity. The main problem with this team seems to be centered around differences in a. interpersonal orientation. b. time orientation. c. goal orientation. d. formality of structure.formality of structure.The dimensions on which functional departments can vary include all the following EXCEPT _____ orientation. a. time b. customer c. technological d. interpersonaltechnologicalThe competition for resources among those representing different organizational functions within a firm often leads to a. erosion of social capital. b. heightened communication. c. organizational politics. d. empowerment of organizational members.organizational politics.The firm's culture promotes unity of purpose for cross-functional work teams through a. a collectivist structure. b. an entrepreneurial mind-set. c. shared values. d. resource allocation.shared values.Independent frames of reference and organizational politics are the two primary barriers to cross-functional team integration. Two methods to facilitate cross-functional integration are _________ and _________ a. autonomous strategic behavior; induced strategic behavior. b. incremental innovations; radical innovations. c. bottom-up integration; top-down integration. d. shared values; effective leadership.shared values; effective leadership.Value creation through internal innovation originates with a. an entrepreneurial mind-set. b. cross-product development teams. c. shared values and entrepreneurial leadership. d. entrepreneurial mind-set.PracticalSolutions is a small firm providing employee assistance programs for companies with troubled employees. PracticalSolutions frequently partners with other consulting firms to provide creative solutions for companies with personnel problems. This history of partnering exemplifies a. intellectual capital. b. institutional capital. c. alignment of complementary assets. d. technological capital.alignment of complementary assets.Blixin Concrete Products, an established firm, is seeking a technologically advanced partner for a strategic alliance. If the potential partner is a new entrepreneurial venture, the main benefit the Blixin Concrete can offer is probably a. investment capital. b. management expertise. c. research and development competencies. d. social networks.investment capital.The main risk in a strategic alliance is that a. the alliance will not result in a successful innovation. b. critical employees will be hired away by the strategic partner. c. one partner will use the other partner's knowledge and use it to enhance its own competitive abilities. d. the partners will lose control over their internal partner will use the other partner's knowledge and use it to enhance its own competitive abilities.Why have large pharmaceutical companies been forming alliances with biotechnology companies? a. to evade legislative restrictions on drug research in the United States b. to develop new products and bring them to market c. because both firms had declining profitability and needed cash infusions from other firms d. in order to gain absorptive capacityto develop new products and bring them to marketNew entrepreneurial firms are better than larger established firms at a. implementing innovations. b. gaining competitive advantage. c. making alliances. d. identifying entrepreneurial opportunities.identifying entrepreneurial opportunities._____ is(are) critical in order for a firm to gain access to resources from partners in a cooperative alliance. a. Complementary strategic goals b. Shared values c. An entrepreneurial mind-set d. Compatible organizational culturesComplementary strategic goalsAn organization engaging in strategic entrepreneurship focuses on identifying opportunities that it can exploit through innovations.trueMost large, complex firms innovate through cooperative strategies or strategic alliances, but not through internal activities.falseCorporate entrepreneurship describes the opportunity seeking and exploitation of innovations in new start-up enterprises.falseEntrepreneurial opportunities exist because of competitive imperfections in the markets and among the factors of production.trueThe essence of entrepreneurship is to capture most of the existing markets from less aggressive and innovative competitors.falseEntrepreneurship is the economic engine driving national economic growth in many nations.trueInnovation is the means by which the entrepreneur creates wealth.trueEntrepreneurial opportunities are conditions in which new goods or services can satisfy a need in the market.trueAs a process, entrepreneurship results in the "creative destruction" of existing products (goods or services) or methods of producing them and replaces them with new products and production methods.trueInvention is defined as the adoption of a similar innovation by different firms.falseJoseph Schumpeter suggested that firms engage in three types of innovative activity when managing the innovation process: imitation, invention, and innovation.trueEvidence demonstrates that large firms with well-funded R&D operations are more effective at innovation than are smaller firms.falseGiven the rapid rate of technological change, patents are not a useful gauge of a firm's entrepreneurial prowess.falseRosalie has become totally preoccupied by her idea for creating a business leasing horses to riders on the same principle as time-shares on condominiums. Rosalie is researching the legal, financial, and insurance aspects of her idea and is preparing a prospectus to take to banks to ask for a business loan. Rosalie's significant other is complaining that she "sleeps, eats, and drinks" this concept. Rosalie has the entrepreneurial characteristic of passion.trueThe entrepreneurial mind-set is found primarily among managerial and scientific employees.falseBill Kroganski is the owner of a moderately successful industrial services firm. His reaction to the introduction of a new process technology that could be a direct competitor to the process his firm utilizes is fear. He spends his time considering ways to isolate his firm from this new technology. Bill has characteristics consistent with the entrepreneurial mind-set.falseIf the company's workers have scant existing knowledge, their "absorptive capacity" to learn new knowledge will be limited.trueFor firms to be entrepreneurial, they must stress individualism in their employees above all other characteristics.falseA society's cultural characteristics influence a nation's rate of entrepreneurship and its related practices.trueIn order to be successful, a new entrepreneurial enterprise should be sheltered from the global environment until it is firmly established in domestic markets.falseResearch has shown that internationally diversified firms are generally more innovative.trueLarger, established firms, mainly those competing globally, use their R&D labs to create disruptive technologies and products.trueMost innovations are incremental, not novel.TrueToyota's Prius, the first mass-produced hybrid-electric car is an example of a novel innovation that has changed the industry by providing new functionalities for users.TrueA company with a need for immediate, large returns should invest in research and development.FalseWhile both incremental and novel innovations can create value, incremental innovations have the potential to contribute more significantly to a firm's efforts to earn above-average returns.FalseA product champion should come from outside the organization in order to ensure that the entrepreneurial vision has the objective support it needs.FalseAn innovation developed through autonomous strategic behavior will probably take the firm into new markets not addressed by its current strategy.TrueFirms that continually change their strategic context and strategies because of the continuous changes in the current competitive landscape are in danger of losing sight of their main competitive strengths.FalseInduced strategic behavior does not result in true innovation because it is a top-down process rather than a bottom-up process.FalseAutonomous strategic behavior results in internal innovations that are highly consistent with the firm's current strategy.TrueThe iPod likely resulted from autonomous strategic behavior at Apple, though the iPhone was more the result of induced strategic behavior.TrueCross-functional work teams are best supported by vertical organizational structures.FalsePolitical activity that is centered on the allocation of resources to the different functions may limit the effective use of cross-functional teams.TrueAn entrepreneurial mind-set, cross-functional product development teams, and shared values/leadership are the three ways that firms implement internal innovations.TrueInnovations can only be produced by actions and activities within the firm.FalseWhile smaller firms must use cooperative strategies as a means of producing innovations, larger firms with large R&D units such as P&G and 3M can produce most if not all innovations internally.FalseAcquisitions are a means of extending the company's product line and increasing revenues. The capital market values growth. Therefore, some firms make acquisitions to improve their standing in the capital markets.TrueAcquisitions are a low-risk approach to producing and managing innovation.FalseA key risk of acquisitions is that a firm may substitute an ability to buy innovations for an ability to produce innovations internally.TrueEntrepreneurial ventures often produce more novel innovations than do their larger, more established counterparts.True